Q4 2024 Selective Insurance Group Inc Earnings Call

In This Article: Participants John Marchioni; Chairman of the Board, President, Chief Executive Officer; Selective Insurance Group Inc Patrick Brennan; Chief Financial Officer; Selective Insurance Group Inc Michael Phillips; Analyst; Oppenheimer & Co., Inc. Paul Newsome; Analyst; Piper Sandler Companies Jing Li; Analyst; KBW Presentation John Marchioni (audio in progress) measure for our insurance operations.

Our 2024 underlying combined ratio, which excludes catastrophe losses and prior year casualty development, was 89.4%, a 90-basis-point improvement from 2023. Standard commercial lines and excess and surplus lines reported to underlying combined ratios in line with 2023, despite actions to increase current year loss cost expectations.



The personal lines underlying combined ratio improved 90.6 points in 2024, as we implemented significant price increases, took meaningful underwriting actions to address underperforming business, and continued transitioning to the mass affluent market. We remain comfortable with the overall composition and quality of our underwriting portfolio despite the adverse emergence in general liability.

While rate increases will continue to be our primary focus for profitability improvement, we also have been making underwriting refinements, including managing limits and coverage grants in challenging jurisdictions; driving improved terms and conditions; and focusing production on better performing classes of business. Consequently, new business growth in commercial lines moderated in the past two quarters. This quarter's commercial lines renewal pure pricing of 8.

8%, and retention of 85%, were both in line with last quarter's results. Exposure growth added 3.8 points, contributing to our total renewal premium change of 12.

9%. Commercialized pricing, excluding workers' compensation, increased 10.1%.

The same as in the third quarter. Renewal pure pricing and commercial property was 11.3%, and commercial auto was 10.

7%. General liability renewal, pure pricing was 10.6%, up from 10.

2% in the third quarter; 7.6% in the second quarter; and 6.5% in the first quarter.

Excess and surplus lines, that will be a strong year with 29% growth, exceeding $500 million of net premiums written for the first time. The 2024 combined ratio was 89.7%, including 4 points of prior year reserve strengthening.

The underlying combined ratio was 81.1%, in line with last year despite actions to increase current year-loss expectations. We continue to pursue technology and automation investments to increase E&S scalability.

While growth has been robust and we continue to see continued market opportunity, we remain mindful of social inflation's broad-based impacts. As a result, we continue to build higher severity increases into our E&S loss picks. We also achieved strong price changes in recent years.

While these higher severity assumptions held up relatively well, $20 million of our prior accident year booking actions were from this segment. Growth in brokerage, our middle market E&S business, along with rate and exposure increases, drove the average E&S account size from 4,600 at the end of 2023 to approximately 5,300 at the end of 2024. While the average premium size increased, our appetite is generally unchanged and we are comfortable with the pricing, terms and conditions, and mix of business.

Our 2025 guidance incorporates strong overall profitability assumptions for the E&S segment. In personal lines, net premiums written increased 4% for the year. However, we saw a 3% decrease in the fourth quarter.

Our strategic repositioning and significant actions to improve personalized profitability contributed to a combined ratio of 91.7% for the quarter, and 109.3% for the year.

Both are meaningfully better than the prior year. 2024's underlying combined ratio was 89.3% with the quarter at 86%.

Renewal pure price increased 27.3% for the quarter, and 20.6% for the year.

In states where we have filed and received approval for adequate rates, we are focusing on growth in the mass affluence segment. With the actions we have taken, we expect personal lines will produce an underwriting profit in 2025. In summary, our team responded well to 2024 challenges, improving our position for 2025 in this uncertain environment.

We are focused on rate and non-rate actions to drive underwriting profitability, while prudently growing the business. I'll now turn the call over to Patrick ,who just completed his first full quarter at Selective. His significant insurance experience and deep background in corporate finance has added a new perspective to our executive leadership team, significantly enhancing our ability to manage the challenging environment and restore our profile of strong and consistent underwriting results.

Patrick?.